SIERRA LEONE EXTRACTIVE INDUSTRIES’ TRANSPARENCY INITIATIVE (SLEITI) final REPORT 2016 SIERRA LEONE EITI REPORT june 2016 PREPARED BY: BOAS & ASSOCIATES P. O. BOX AT 1367 ACHIMOTA-ACCRA GHANA MOBILE: +233 244 326838 EMAIL: [email protected] Table of Contents List of Abbreviations/Acronyms ............................................................................................................... i Statement from the Independent Administrator ........................................................................................ ii Executive Summary ............................................................................................................................... iii 1.0 Background ....................................................................................................................................... 2 1.1 EITI in Sierra Leone ...................................................................................................................... 2 1.2 Objectives and contents of the report .............................................................................................. 3 1.3: Approach and Methodology .......................................................................................................... 4 2.0 Overview of the Extractive Industry in Sierra Leone .......................................................................... 6 2.1 Mining Sector ................................................................................................................................ 6 2.1.1 Large-scale mining operations ................................................................................................. 7 2.1.2 Artisanal Mining and Small Scale Mining (ASM).................................................................... 7 2.2 Oil/Gas .......................................................................................................................................... 7 3.0 Legal Framework and Fiscal Regime ................................................................................................. 8 3.1 Mining Sector ................................................................................................................................ 8 3.1.1 Fiscal regime ........................................................................................................................... 9 3.1.2 Roles of Government institutions........................................................................................... 11 3.1.3 Extractive sector reforms ....................................................................................................... 12 3.1.4 Fiscal Devolution .................................................................................................................. 13 3.2 Oil/Gas ........................................................................................................................................ 13 3.2.1 Description of fiscal regime, laws, reforms and regulations.................................................... 13 3.2.2 General Fiscal Regime of the Petroleum Industry .................................................................. 13 3.2.3 Other Fiscal Requirements .................................................................................................... 14 3.2.4 Roles of institutions in the Oil/Gas sector .............................................................................. 15 3.2.5 Reforms in the oil and Gas Sector.......................................................................................... 15 3.2.6 Fiscal Devolution .................................................................................................................. 15 3.3 License Allocations...................................................................................................................... 16 3.3.1 Mining Sector ........................................................................................................................... 16 3.3.2 Allocation of Oil and Gas License ......................................................................................... 24 3.4 Contracts ..................................................................................................................................... 30 3.4.1 Mining .................................................................................................................................. 30 3.4.2 Contract Disclosure ............................................................................................................... 31 3.5 Beneficial Ownership................................................................................................................... 32 3.6 State Participation in the Extractive Sector ................................................................................... 33 4.0 Exploration, Production and Exports ................................................................................................ 34 4.1 Exploration Update ...................................................................................................................... 34 4.2 Production and Exports ................................................................................................................ 36 5.0 Revenue Collection.......................................................................................................................... 39 5.1 Revenue Flow .............................................................................................................................. 39 5.1.1 Mining .................................................................................................................................. 39 5.1.2 Oil/Gas ................................................................................................................................. 43 5.2 Scoping Study.............................................................................................................................. 44 5.3 Scoping Outcomes ....................................................................................................................... 46 5.3.1 Materiality statement and Reporting Entities: ........................................................................ 46 5.3.2 Revenue Streams ................................................................................................................... 47 5.3.3 Government reporting entities ............................................................................................... 48 5.3.4 Oil/Gas ................................................................................................................................. 49 5.4 Reporting Companies and Extractive Industry Entities ................................................................. 49 5.5 Discrepancy ................................................................................................................................. 49 6.0: Other Revenue Sources and Reporting Parameters .......................................................................... 50 6.1 State’s share of production or other revenues collected in-kind ..................................................... 50 6.2 Mandatory and voluntary social expenditures ............................................................................... 50 6.3 Infrastructure provisions and barter arrangements ........................................................................ 50 6.4 Transportation payments .............................................................................................................. 50 6.5 Quasi-fiscal expenditures ............................................................................................................. 51 7.0 Reconciliation.................................................................................................................................. 51 7.1 Scope of Work ............................................................................................................................. 51 7.2 Activities undertaken at reconciliation.......................................................................................... 53 7.3 Results of Reconciliation ............................................................................................................. 55 7.3.1 Reporting .............................................................................................................................. 55 7.3.2 Completeness, accuracy and reliability of data ....................................................................... 56 7.3.3 Reconciliation by companies ................................................................................................. 58 7.3.4 Reconciliation by Revenue streams ....................................................................................... 59 7.3.5 Non material revenue streams ................................................................................................ 60 7.3.6 Discrepancy .......................................................................................................................... 60 7.3.7 Coverage ............................................................................................................................... 63 i | P a g e Boas & Associates 7.3.8 Effect of companies/extractive entities that did not participate on coverage............................ 63 7.3.9 Analysis ...............................................................................................................................